BUSINESS PLAN
Jordan Brown
Jean Jen
Solange Lansiquot
Meghan Misquita
Business Plan for BLO (Client: MPAcc Investments)
TABLE OF CONTENTS
1.0
EXECUTIVE SUMMARY .......................................................................................................................... 3
2.0
INTRODUCTION TO BLO - BLOW DRY BAR (BLO) ................................................................................... 3
2.1
2.2
2.3
2.4
2.5
3.0
3.1
3.2
3.3
4.0
4.1
4.2
4.3
4.4
4.5
4.6
4.7
5.0
5.1
5.2
5.3
5.4
6.0
6.1
6.2
6.3
6.4
6.5
7.0
THE BLO CONCEPT ...........................................................................................................................................3
BLO’S VISION, MISSION, OPERATIONAL GOALS AND OBJECTIVES ...............................................................................4
KEY SUCCESS FACTORS .......................................................................................................................................5
INDUSTRY ANALYSIS...........................................................................................................................................5
PORTER’S FIVE FORCES.......................................................................................................................................6
MARKETING PLAN ................................................................................................................................. 7
SEGMENTATION, TARGETING, AND POSITIONING .....................................................................................................7
COMPETITOR ANALYSIS ......................................................................................................................................8
THE MARKETING MIX ........................................................................................................................................9
OPERATIONS PLAN .............................................................................................................................. 12
LEGAL STRUCTURE...........................................................................................................................................12
SHAREHOLDER AGREEMENT ..............................................................................................................................12
ORGANIZATIONAL STRUCTURE ...........................................................................................................................13
FLOOR PLAN ..................................................................................................................................................13
CAPITAL BUDGET ............................................................................................................................................13
OPERATING EXPENSES......................................................................................................................................14
DAILY OPERATIONS – THE CLIENT EXPERIENCE......................................................................................................15
HUMAN RESOURCES PLAN .................................................................................................................. 15
JOB DESCRIPTIONS ..........................................................................................................................................15
TRAINING PROGRAMS ......................................................................................................................................18
HUMAN RESOURCES STRATEGY..........................................................................................................................18
LABOUR COSTS ...............................................................................................................................................19
FINANCIAL PLAN ................................................................................................................................. 19
CRITICAL VARIABLES & RISK ASSESSMENT ............................................................................................................19
PROJECTED FINANCIAL STATEMENTS ...................................................................................................................20
FINANCING BUDGET ........................................................................................................................................20
DIVIDEND POLICY ............................................................................................................................................21
INVESTMENT ANALYSIS .....................................................................................................................................21
CONCLUSION ...................................................................................................................................... 22
EXHIBITS .............................................................................................................................................................. 23
EXHIBIT 1 - PORTER’S FIVE FORCES ...............................................................................................................................23
EXHIBIT 2 - SWOT ANALYSIS .......................................................................................................................................24
EXHIBIT 3 - POSITIONING MAP .....................................................................................................................................25
EXHIBIT 4 – MARKETING EVENTS & MATERIALS ..............................................................................................................26
EXHIBIT 5 - FLOOR PLAN .............................................................................................................................................27
EXHIBIT 6 - ORGANIZATION CHART ...............................................................................................................................28
EXHIBIT 7 – COMPETITOR LOCATION MAP........................................................................................................................29
EXHIBIT 8 – CLIENT EXPERIENCE PROCESS ......................................................................................................................30
EXHIBIT 9 – RISK ANALYSIS ..........................................................................................................................................31
REFERENCES ........................................................................................................................................................ 32
APPENDICES – Financial Summaries
(please see attached excel document)
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Business Plan for BLO (Client: MPAcc Investments)
1.0
EXECUTIVE SUMMARY
This business plan details our proposal to open a BLO dry bar franchise in downtown Calgary,
Alberta. The idea for BLO was formed based on the question “Why isn’t there a place for a quick,
affordable, catwalk-quality hair?” BLO’s motto is that you’re not cheating on your hairdresser.
Scissors are verboten. Dye, ditto. In about 30 minutes, get a wash and to-die-for BLO out. No cuts,
no colour: Just Wash BLOW GO. Our goal is to raise the required capital to realize our vision to
successfully launch Alberta’s first BLO location on time and budget by August 2011.
BLO’s four key success factors are:
 Low price: BLO will offer its signature styles and services at an affordable price.
 Speed: BLO offers off-hour appointments and regular walk-in services, having the client’s
hairstyle finished within the promised time frame.
 Cat-walk quality: BLO’s stylist will go through training to ensure that they focus on the client
experience and be experts at BLO’s signature styles.
 Dynamic atmosphere: BLO will provide a fun, trendy, modern atmosphere where women
and men can gather and socialize.
A major component of BLO’s success is that they provide a dynamic and exciting environment for its
employees and clients. Employees are encouraged to stay up to date on all current fashion trends
and pop-culture happenings to create a cool salon vibe. BLO is not just about the hair but providing
an affordable luxury and an unforgettable experience.
To compete with established local salons, BLO’s strategy is to focus on increasing brand equity and
service differentiation through the local media, rather than large, national media as well as various
marketing initiatives such as the use of Facebook, YouTube, and Twitter which are proven to be
inexpensive and effective marketing mediums.
By investing in BLO, you will play a role in the creation of this new venture to Calgary and will
guarantee yourself a portion of a growing business.
2.0
INTRODUCTION TO BLO - BLOW DRY BAR (BLO)
2.1
The BLO Concept
BLO is North America’s original Blow Dry Bar where scissors are verboten. Dye, ditto. In about 30
minutes, get a wash and to-die-for BLO out. No cuts, no colour: Just Wash BLOW GO. Hair Cadets
(aka clients) choose from 7 styles featured in BLO’s signature Hair Menu, from the sexy razorstraight “Executive Sweet” to the rocker-chic inspired “Sex, Hugs and Rock & Roll”.
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Business Plan for BLO (Client: MPAcc Investments)
2.1.1 Culture
The BLO experience encompasses fashion, vibe and culture.
2.1.2
BLOcabulary
 Hair Cadet: the new school moniker for client. Someone who has racked up more
frequent dryer miles than you could possibly imagine.
 BLO Out: we aren’t just referring to a red tag sale at K-Mart; a BLO out is just
another way of referring to a styling session or the act of getting, well blown.
 Bloer (aka session stylist): those who give hair cadets catwalk quality hair.
 BLO Bro: a dude that, like, digs dryers
 BLO Girl: out of the sandbox, but not quite at the mall. 12 and under.
 Pink Wig Girl: the official BLO mascot, sort of. The PWG is seen at all the hot parties
and provides killer photo opportunities for the paparazzi and adoring fans.
 BLO Tab: couldn’t be easier to get a BLO...forget the plastic and get 8 BLO outs for
the price of 7.
 BLO U(niversity): an intensive program where Bloers master BLO’s signature styles.
2.2
BLO’s Vision, Mission, Operational Goals and Objectives
2.2.1 Vision
To be North America’s largest blow dry bar chain.
2.2.2 Mission
To provide quick, affordable, catwalk-quality hair to style conscience individuals.
2.2.3 Short-Term Objectives (1-2 years)
 Successfully launch Alberta’s first BLO location on time and budget.
o Targeted August 2011 launch date.
 Establish our clientele base through repeat customers and word-of-mouth referrals.
o Drive repeat business through exceeding our hair cadet’s expectations.
 Achieve customer satisfaction.
o Maintain brand promise of completing BLO outs within approx. 30 minutes.
o Ensure consistent quality (measure through customer feedback.)
 Earn a positive net income by the 2nd year of operations
o Drive sales growth to achieve financial projections
2.2.4 Long-Term Objectives (3+ years)
 Expand to a Multi-Unit Franchise within the Alberta market.
o Replicate the BLO concept within other locations in Calgary and Edmonton.
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Business Plan for BLO (Client: MPAcc Investments)
 Achieve employee satisfaction.
o BLO bosses and Bloers are our main point of contact with hair cadets, so we need to
ensure that they are well trained and motivated.
o Develop staff events, flexible work terms, positive work culture, and on-going
training.
 Achieve an Internal Rate of Return of at least 25% by year 5.
o Build both the in-bar and out-bar sides of the business in order to achieve financial
projections.
 Achieve a payback on investment within 5 years.
2.3
Key Success Factors
In order for BLO Calgary to be successful and reach the goals as indicated above goals, it is
important to identify BLO’s key success factors (KSF) as follows:
 Low price: BLO will offer its signature styles and services at an affordable price.
 Speed: BLO offers off-hour appointments and regular walk-in services, having the client’s
hairstyle finished within the promised time frame.
 Cat-walk quality: BLO’s stylist will go through training to ensure that they focus on the client
experience and be experts at BLO’s signature styles.
 Dynamic atmosphere: BLO will provide a fun, trendy, modern atmosphere where women
and men can gather and socialize.
The four KSF’s identified above are primarily dependent on BLO’s employees – their ability to create
a fun and trendy environment, provide quality hair styles within the time frame, which will directly
impact revenues since capacity is based labour hours. Therefore, it is critical that BLO provides a
dynamic and exciting environment for its employees and clients. Employees are encouraged to stay
up to date on all current fashion trends and pop-culture happenings to create a cool salon vibe. BLO
is not just about the hair but providing an affordable luxury and an unforgettable experience.
2.4
Industry Analysis
History has shown that during the time of economic recession women continue to spend more on
small luxuries. These consumers would rather cut back on other discretionary expenses before
decreasing the spending on their personal appearance. Professional Consultants & Resources, the
leading strategic consultant and industry data source in the beauty industry, recently released its
2010 Professional Salon Industry Study, which reports overall salon industry growth at 4.5% and
salon hair care growth at 4% in 2010. Some of the main growth drivers were basic cuts, colours and
styling. With the increasing competitive work environment, the need to appear well groomed and
attractive becomes more important. The fast pace urban lifestyle leaves little time for personal
grooming thus, increasing the dependence on these professional services. Further, women are
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Business Plan for BLO (Client: MPAcc Investments)
looking for an escape and an opportunity to pamper themselves but are opting for less expensive
services to fit their budgets.
Beauty salons are mostly comprised of small independently-owned salons. Please see Exhibit 1
(Porter’s Five Forces) & Exhibit 2 (SWOT Analysis) for industry details, including the strengths,
weaknesses, opportunities and threats. Demand for the beauty salon industry is mostly driven by
demographics. In this highly fragmented competitive environment, businesses can compete with
the large chain salons based on their image, reputation and/or location.
During the past several years, the Calgary population has grown by more than 16% and its
employment rate and per capital income are both greater than the national average (Statistics
Canada, 2011). Further, according to the 2006 Statistics Canada Report Canadians are spending
more on personal care services as total spent in 2006 was $8.7 billion with hair care and aesthetics
accounting for 45% or approximately $3.9 billion. The most growth in revenues was experienced by
establishments in Alberta at +10.9% and British Columbia at +5.6% (Statistics Canada, 2011).
The outlook for the beauty salon industry in Canada is promising as the demand for these services
continues to grow. BLO has strategically positioned itself to provide fast, low cost services that will
meet the needs of its fast passed urban lifestyle customers.
2.5
Porter’s Five Forces
2.5.1 Rivalry
Competitive rivalry within BLO’s industry would be considered to be high. BLO is able to sustain
itself as it has a competitive advantage by being the first mover in the industry. The company’s
marketing strategy is focused on differentiating themselves in the industry as a low cost luxury that
does not leave the customer feeling as though they cheated on their own hairdresser. This is a
powerful competitive strategy as the company does not replace a customer’s hairdresser, instead
BLO becomes an additional service that customers uses in between their regular haircuts.
BLO is highly active on the social media scene by making itself present on sites such as Facebook,
YouTube, Flickr, Twitter and its own web site blomedry.com. Further, it is highly involved in local
social events which make its presents known within its local community. The company has a high
level of innovative marketing and branding that allows it to sustain its competitive advantage and
put pressure on its rivals.
2.5.2 Supplier Power
BLO’s supplier power would be at a low level as there are many competitive suppliers for the
products the company needs such as, hair care items including shampoo, conditioner, and styling
products as well as tools used in day to day operations such as blow dryers, curling irons and flat
irons. These items are standardized and easily obtained in the open market, therefore supplier
power is low.
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Business Plan for BLO (Client: MPAcc Investments)
2.5.3 Threat of New Entrants
Threats of new entrants to BLO’s market are high. There are low barriers to entry if necessary
establishments can easily exit the market. The costs to set up a similar establishment could be as
easy as converting a room in one’s home into a useable independent salon to leasing high end
space in an upscale neighbourhood. Other indications that this industry is easy to enter is that the
knowledge is common or easily obtainable, brand franchises are easily obtained at a low cost and
assets are easily purchased and sold in the open market. In effect, the threat of new entrants is a
large risk to BLO. Please see Section 6.1 for details on critical variables and risk assessment.
2.5.4 Buyer Power
BLO’s customer market is highly fragmented. Buyer switching costs are low and there is a lot of
information available to the buyers. These factors indicate that buyer power is high meaning that
there is a tendency of customers to switch to available alternatives. BLO’s strength is that it focuses
on brand identity, thus differentiating itself from other products or services offered in the market.
2.5.5 Threats of Substitutes
BLO is subject to many possible substitutes in the market, though they have the first-mover
advantage. Customer switching costs are low. For example, existing hair salon’s can offer the same
or similar services to their existing customer base. As such, customers will more likely remain loyal
to their current hair stylist due to pre-existing relationships. In addition, new products could enter
the market to assist potential clients with styling their own hair at home. BLO intends to overcome
these potential obstacles by focusing on brand identity and service differentiation through various
marketing initiatives such as Facebook and Twitter and local influential media personalities.
3.0
MARKETING PLAN
3.1
Segmentation, Targeting, and Positioning
3.1.1 Segmentation
In order to identify BLO’s target market, the total market must first be segmented by age, income
level, and geography:
 Currently, the total population of Calgary is approximately 1.3 million, with 535,000 people
between the ages of 20 and 40 (Calgary Economic Development, 2011).
 Target market includes females between the ages of 20 and 44, which make up 40% of the
female population in Calgary. The income level of these individuals is between $25,000 to
$65,000. These individuals lead hectic lives between family, extra-curricular activities and
their career, are social, and are very style-conscious and trendy.
 The target market includes areas in and around downtown Calgary, mainly wards 7 and
8.The population of the communities within these wards is comprised of approximately 52%
of BLO’s target market.
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Business Plan for BLO (Client: MPAcc Investments)
3.1.2 Target Market Characteristics
The primary target market will be YUPPIES, which can be defined as young urban professionals, who
lead affluent lifestyles, are career focused, and are commonly found in up and coming
neighbourhoods, usually without kids and therefore have a higher disposable income. These people
are always on-the-go and place importance in the convenience and speed of services. Therefore to
summarize, the primary needs of BLO’s target market are services offered at an affordable price
that can be completed within a shorter-than-average time frame (ie. speed).
3.1.3 Positioning
‘You’re not cheating on your hairdresser’.
BLO wants to get the message across that they aren’t trying to steal you away from your current
stylist. They simply want to offer a convenient service for people on-the-go. BLO has already
established itself in several bigger US and Canadian cities and is continuing to expand. With the
increasing population and spending on personal aesthetics, Calgary provides a great base for BLO to
continue to expand its brand.
3.2
Competitor Analysis
There is no primary competition for BLO since BLO has a first-mover advantage as previously
discussed. BLO’s service offering is different than other salons as BLO doesn’t cater directly to the
same market as its competitors. BLO specializes in hairstyling. It offers hairstyling services and
product sales. BLO’s closest competition is other hair salons in the vicinity that offer hairstyling in
addition to other services.
In the area where BLO wishes to establish its business, there are four major competitors: Hed Kandi,
Pure Form, Zu, and Black Market Hair. Each of these salons offers the full service menu of a typical
hair salon including hairstyling and up-dos. The positioning map on Exhibit 3 indicate BLO’s
competitive advantage relative to the four competitors based on the target market’s needs as
identified above (price and speed). As can be seen on exhibit 3, BLO is able to provide the lowest
cost and the quickest service. Furthermore, BLO will be able to differentiate itself through the
following areas:
 Low price: BLO will offer its signature styles and other services at an affordable price.
 Speed: BLO offers appointments and the convenience of walk-in services, having the client’s
hairstyle finished with the allotted timeframe.
 Cat-walk quality: BLO’s stylist will go through training to ensure they are experts at BLO’s
signature styles and the overall customer experience.
 Different atmosphere: BLO will provide a trendy, modern atmosphere to host its offerings.
The name BLO Dry Bar gives it a feel of a hangout rather than a regular salon.
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Business Plan for BLO (Client: MPAcc Investments)
With the vast offerings provided by BLO’s competitors it will be hard for them to offer the same
convenience as one has booking with BLO.
3.3
The Marketing Mix
3.3.1 Product
The core product offered by BLO is the BLO Out – the service of “wash, BLO, go” whereby a client
receives a wash, blow dry, and style in about 30 minutes. This core service is formally offered in
seven different hair styles on the “signature hair menu”. In addition to the seven signature hair
styles, the services can be augmented by hair cadets such as adding hair extensions, deep
conditioning, etc. As an alternative to the seven signature hair styles, BLO also accommodates
special requests – when the hair cadet brings a picture of the hair style they would like. BLO also
offers hair styles for men (BLO Bro) and young girls (BLO Girl) under the age of 12 at a lower price
point.
BLO provides the services in four main streams:
 BLO in-bar : hair cadets make an appointment via BLO’s website or telephone, or walk-in to
BLO’s physical location.
 BLO on the Go: Bloers will come directly to the requested location, whether it be in the
office before a big presentation, on the set for a photo shoot, or at a hotel party.
 BLO Bridal: at the request of the bride-to-be or a helpful bridesmaid, a group of Bloers to
come to the wedding location (hotel, church, reception, etc.) and offer group styling for
brides and their entourage for the perfect day.
 BLO Parties: for a fixed fee by the hour, Bloers will come directly to the stagette, birthday,
theme parties, baby showers, or even product launches.
In addition to BLO out services, BLO sells UNITE hair products, a premium boutique line of
professional hair care products. UNITE products are 100% vegan, gluten free, PETA approved, and
have been endorsed by celebrities such as Eva Longoria Parker, Kim Kardashian, and Demi Moore.
Since BLO uses UNITE products for wash and style, clients can directly experience the quality of
these products. Furthermore, BLO is the only blow-dry bar retailer in the world to carry UNITE
products.
(For comparative pricing for services and products, refer to Pricing below)
3.3.2 Promotion
Although the hair services industry is a highly fragmented and highly competitive, BLO has a firstmover advantage as the first blow-dry bar as previously discussed. BLO Corporate in Vancouver has
established a strong culture and developed strong brand identification through the three primary
promotion vehicles: viral marketing, social marketing, and sales promotion. Therefore, at the
franchise level, it is important to adopt BLO Corporate’s promotion strategy to market the products,
build reputation, and increase brand equity in Calgary.
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Business Plan for BLO (Client: MPAcc Investments)
3.3.2.1 Viral Marketing
BLO corporate has already created an account on Facebook, Twitter, and YouTube. As these
accounts and the BLO website (blowmedry.com) are managed by BLO corporate, there is no
additional cost to the Calgary Franchise. Additionally, these vehicles create an online community of
current clients, and attract future clients through word-of-mouth marketing (WOMM) as BLO can
directly communicate with current/potential clients through facilitating online discussions and
receive direct customer feedback, which is a benefit as it can be used for market research
opportunities.
Examples of communication with clients include online promotions of up and coming special events
and in store promotions as discussed below. BLO corporate has used these websites for market
research, such as offering a chance to win 5 free BLO outs for filling out a survey. In addition to
continuous communication with clients, BLO also uses its online medium to build a strong brand
culture and shares it by using its vocabulary, slogans, and blogging about the latest fashion trends,
which results in bonding with the its target market, who are social and trendy individuals.
3.3.2.2 Advertising & Social Marketing
In order to compete with local salons, BLO’s strategy is to focus on increasing brand equity through
the local media, rather than large, national media. Specifically, BLO corporate assists each franchise
by connecting them with influential media personalities and local celebrities, such as well-known
news anchors, talk-show hosts, etc.
To increase local exposure in Calgary, BLO will actively get involved in local parties and high-profile
events in Calgary such as:





Calgary International Film Festival
Calgary Stampede
Trendy restaurants and hotel grand openings
Mall events (e.g. Holt Renfrew Fashion Show)
Special events (e.g. Hair show exhibitions)
At each event, BLO can set up a BLO-on-the-go, which includes catchy slogans and iconic figures
(pink wig girls). Participation in these events is effective in directly reaching the target market.
3.3.2.3 Sales Promotion
Sales promotion primarily relates the retail products - BLO will have occasional “BLO-outs”, where
UNITE products are sold at a discounted price. This is usually determined by BLO corporate, excess
inventory levels at the local franchise, and any discounts/special offers from the supplier (UNITE.)
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Business Plan for BLO (Client: MPAcc Investments)
BLO Calgary could also participate in Groupon and offer discounted BLO’s via the Calgary Groupon
portal. This is likely to be the most effective a few weeks after grand opening as it will help build the
initial customer base.
Please see Exhibit 4 for examples of Marketing Material.
3.3.3 Pricing
Since BLO has first-mover advantage, it also has price leadership in the services provided relative to
other salon competitors:
Wash, Blow-dry, Style
Hourly (group) Rate
Retail Hair Products
BLO
$35
75
27
Hed Kandi
$90+
N/A
25
Pure Form
$75+
N/A
25
Zu
$60+
N/A
23
Black Market Hair
$50+
N/A
23
As can be seen above, there is a wide gap between the prices of BLO and competitors for the type
of service. This essentially creates a niche market for BLO in the category of wash, blow-dry, style.
BLO corporate has utilized this advantage by incorporating psychological pricing using the slogan
“30 minutes for about 30 dollars” – in other words, not only does BLO offer at a lower price, but can
also complete the service quicker than competitors, satisfying the two crucial needs of the target
market.
Since BLO offers services “out of the bar” (ie. BLO on the Go, BLO Parties, BLO Bridal), it is able to
offer hourly/group rates, which are not offered by other salons. The pricing for retail hair products
are similar among all competitors, as each salon carry different high-end hair product brands such
as Redken and Bumble & Bumble. However, BLO is the only blow-dry bar to carry UNITE products,
and can charge a slight price premium for being vegan and PETA approved.
In addition to a fixed price for individual hair styles, BLO also adopts bundle pricing for BLO Bridal
(consultation and style), and volume pricing for BLO Tab (get 8 for the price of 7) and BLO Parties
(flat evening and daily rates). Bundle and volume pricing are also effective promotion vehicles in
customer retention as they encourage repeat visits.
3.3.4 Place: First Street Village
 Easy Access to Parking.
o Underground heated secured parking available within Union Square.
o Underground heated secured parking available at Hotel Arts.
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Business Plan for BLO (Client: MPAcc Investments)
 What’s foot traffic like? Day? Night?
o High Foot Traffic with a young affluent population in the three new residential
towers within one block radius.
o Minutes from the city’s business centre, Union Square is the premiere landmark in
Calgary’s flourishing First Street Village.
 How visible is the storefront?
o The storefront is located in the podium of Union Square condo tower and is very
visible from the street.
 What is the square footage?
o The square footage of Commercial Retail Unit “C” within Union Square is 895 sq. ft.
 Surrounding stores, restaurants, residences?
o Burgeoning boutique fashion district with O’Connor’s Menswear, O’Connor’s
Women’s and Foreman’s Menswear.
o Hotel Arts located within a block.
o Numerous surrounding restaurants including:
 St. James Corner (Irish Pub)
 Taste (Small Plates & Wine)
 Kicker’s (Deli)
 Subway
 Jugo Juice
 Drum & Monkey (Pub)
o Other retail shops including:
 Anytime Fitness (24-Hour Gym)
 Forbidden Clothing
 The Hot Yoga Lounge
4.0
OPERATIONS PLAN
4.1
Legal Structure
BLO will be incorporated as a CCPC in order to distribute shares to the four owners and to take
away personal liability from the owners.
4.2
Shareholder Agreement
A shareholder agreement will be drafted by a lawyer and agreed upon by the four shareholders
indicating the control over the franchise, any future share sales, the process for selling a
shareholder’s shares, and liquidation of the business. Future offers of common stock need to be
agreed upon by the existing shareholders. In the event that any shareholder wishes to sell their
shares, the other shareholders will have the first option to purchase shares. In the event of a share
sale, the sale price will be determined according to the value assessed by a Business Valuator. If the
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Business Plan for BLO (Client: MPAcc Investments)
company chooses to liquidate its assets, the remaining proceeds after creditors are paid will be
divided proportionately among the common shareholders based on proportional ownership of the
common shares.
4.3
Organizational Structure
Given the store hours, the following staffing needs are required as follows:





Franchise owner
Bar boss
Assistance manager
A total of four full-time and eight part-time Bloers
Two receptionists
4.4
Floor Plan
The floor plan (Exhibit 5) of BLO is a critical part of its business as it emulates the business concept
of a modern, relaxing, and social environment.
 Entrance: open area with the reception desk at first sight and seating area to the
right. The furniture is all modern and trendy.
 Styling stations: eight stations will be located in the center of the salon. Bright lights,
white coloured stations, and clear plastic chairs emphasize the modern feel of the
salon.
 Wash basins: three wash basins will be located at the back of the salon for hair
washing and scalp massages.
 Product display: Unite product line will be stored on the white shelving units to
display the various products in this hair product line.
 Bathroom: a bathroom will be available for client and staff usage.
 Backroom: will be used to store product inventory for sale and for salon, in addition
to towels, washer and dryer, a kitchenette (for serving clients coffee, tea or water),
and a staff area for eating and taking breaks.
4.5
Capital Budget
The costs required to start BLO Calgary include the following:
 Franchise fee - $25,000
 Build-to-open costs - $230,000
o Design/permits
o Leasehold improvements
o Development fee
o Bar equipment
o Computer/point of sale (POS) package
o Retail products
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Business Plan for BLO (Client: MPAcc Investments)
o Travel expense
 Additional closing costs - $24,000
o Legal & accounting (for setting up the franchise structure)
o Lease deposits
o Additional marketing or brand building (for market penetration and setting up
initial presence in Calgary)
4.6
Operating Expenses
Aside for start-up capital expenses as identified above, annual ongoing operating costs are outlined
in Schedule F within the Financial Plan:
 Building Lease: for an 8-chair BLO location, approximately 700 square feet of space is
required. The annual lease cost for downtown Calgary is approximately $28/square foot (CB
Richard Ellis, 2011). Therefore, annual building lease payments are expected to be $19,600,
and will be fixed for the next 5 years as BLO will enter a 5-year lease agreement.
 Wages & Benefits: includes salaries and benefits for Bar Manager 4 full-time and 8 part-time
Bloers. Please see the Labour Costs in Section 5.4 for details.
 Accounting & Legal : the average legal and accounting costs for the hair salon industry in
Calgary is $3000/year (Industry Canada, 2011). Considering that BLO has a more simple
business model and operations than a normal hair salon, using $3000 is a reasonable and
conservative estimate.
 Insurance: annual insurance costs include premiums paid for coverage such as fire, theft,
employment liability, etc. are expected to be $1500/year in downtown Calgary region
(Industry Canada, 2011)
 Repairs & Maintenance: costs related to new or replacement parts, and/or restoration of
salon equipment to keep in working condition are $3000/year for the hair salon industry in
Calgary (Industry Canada, 2011).
 Telecommunications & Utilities: telecommunications (telephone, internet, and cable) and
utilities (electricity & water) have an annual cost of $3000-5000/year for hair salons industry
in Canada (Industry Canada, 2011). Therefore, the average cost of $4000/year is assumed to
be a reasonable estimate.
Expenses that have been excluded from the operation expense schedule:
 Website Maintenance: these costs are excluded as the website will be maintained and paid
for by BLO Corporate.
 Supplies & Office Expense: these costs are assumed to be minimal and are expected to vary
each year, and therefore, as excluded from ongoing operating costs as they are immaterial
Page 14 of 33
Business Plan for BLO (Client: MPAcc Investments)
4.7
Daily Operations – The Client Experience
BLO Dry Bar will be open various hours throughout the week, concentrating longer hours from
Thursday to Saturday when it is more likely for business to pick up. There are also designated hours
allocated prior to opening and after closing for specific client appointments. It is expected that the
salon will be steady throughout the year with the exception of May-September for grads and
weddings, and December for holiday parties. Appointment bookings will be dictated by the number
of employees available at any given point.
The following is a detailed outline of the customer experience from start to finish:
1. BLO client will phone or go online to find out hairstyles and services offered by BLO.
2. Clients will book their appointment with the receptionist by calling into BLO and describing
the service they wish to receive. Volume expectation is likely to be 70% appointment and
30% walk-in given the nature of the business and the convenience of the service.
3. The client will arrive prior to their scheduled appointment and will check-in with the
receptionist. They will be offered coffee or water from the receptionist and are seated in
the waiting area.
4. The receptionist will notify the stylist of their client’s arrival.
5. The stylist greets the client and seats them at their station already having prepared the tools
and products necessary to care for the client.
6. The client will then discuss their desired hairstyle and an understanding will be made
between the client and hairstylist.
7. The stylist engages the client in friendly conversation while completing the hairstyle. The
talk is light and the stylist is good at engaging conversation.
8. After completing the hairstyle, the stylist ensures the client is satisfied with their hairstyle
and makes adjustments where necessary.
9. The stylist will make suggestions about products and the client will choose to purchase
product or not.
10. The client will proceed to the receptionist where they will pay for their service and any
products they may wish to purchase.
11. The client tells their friends and family about their positive experience at BLO Dry Bar and
word of mouth advertising is spread around.
Refer to Exhibit 8 for a diagram of the Customer Experience.
5.0
HUMAN RESOURCES PLAN
5.1
Job Descriptions
BLO has three main employees including the Bar Boss, Bloers and receptionist each of which is
accountable to the franchise owner. The following is a description of each employee’s general
duties and qualification requirements.
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Business Plan for BLO (Client: MPAcc Investments)
5.1.1 Franchise Owner
The franchise owner oversees and approves all the salon manager decisions. The franchise owner
reviews the monthly and annual financial information, organizes all marketing initiatives, arranges
the Bar’s financing, approves all large purchases, and is responsible for corresponding with the Bar’s
accountants, lawyers and franchise head office as necessary.
5.1.2 Salon Manager (Bar Boss)
The ideal Bar Boss will be trained in all functions of the BLO Bar including reception, styling and
management responsibilities. The Bar Boss must have the capacity to manage all bar staff and
oversee the daily operations of the bar including:










Order and maintain inventory levels as needed.
Prepare weekly time schedules.
Resolve conflicts with hair cadets (clients).
Resolve conflicts between employees.
Ensure that all session stylists are providing quality work and enjoyable hair cadet
experience.
Step into the other bar roles as needed.
Report directly to the franchise owner.
The Bar Boss will be responsible for interviewing, hiring and firing of Bloers (session
stylists) and receptions staff as needed. In addition, the Bar Boss will organize the
training of successful Bloer candidates to attend BLO U(niversity), provided by the
franchise.
The Bar Boss will oversee the set up and execution of marketing activities such as the
bridal show exhibit and local advertising in the Metro and Avenue publications.
The Bar Boss is required to prepare monthly and annual general accounting duties such
as bookkeeping and payroll functions as well as daily bank deposits.
The Bar Boss must be a self motivated individual with previous customer service, retail sales and/or
salon experience. The ideal manager will have a passion for fashion and be up to date on all the
latest trends. Further, the Bar Boss will have a minimum of three years experience in a managerial
role and a business diploma or degree.
5.1.3 Session Stylists (Bloers)
The ideal Bloer will have pervious salon experience; have a passion for fashion and be up to date on
all new popular trends in the fashion industry. Bloer responsibilities include:
 Provide hair cadets (customers) with an amazing experience to keep them coming back
for more by being friendly and hospitable.
Page 16 of 33




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Business Plan for BLO (Client: MPAcc Investments)
Provide hair cadets a quality hair style within the allotted appointment time.
Keep up to date with fashionable and current hair trends.
Bloers are responsible for all Unite hair product sales.
Maintain a clean work station.
Responsible for opening and closing store when off hour appointments are made.
Responsible for receptions duties during off hour appointments including booking
return appointments and accepting payments.
Report directly to management.
May be required to assist management as needed.
The Bloer will have a willingness to learn and keep up to date with changing hair trends. Bloers
should demonstrate their pop culture knowledge by ensuring their hair is BLO worthy.
5.1.4 Receptionist
The receptionist will be able to multitask and have warm, welcoming and outgoing attitude. The
main responsibilities include:
 Answer telephone calls, confirm and book appointments for clients.
 Greet all guests. Offer and provide guests with water, tea or coffee.
 Ensure beverages are stocked including milk, cream and sugar, coffee is prepared,
glasses and coffee mugs are clean and available to clients.
 Schedule walk in appointments.
 Report directly to management.
 Cashier duties including processing all payment receipts and day end reconciliations.
The ideal receptionist will have previous cashier and reception experience as well as have a flare for
fashion and all things BLO.
5.1.5 Assistant Manager
As the BLO Bar grows there may be need to add an assistant manager position. The assistant
manager’s responsibilities will include:






Provide guidance and assistance to Bloers.
Manage hair cadet conflicts.
Manage Bloer conflicts.
Report directly to the Bar Boss.
Assist Bar Boss with administration duties.
Relive reception during reception lunch breaks.
Page 17 of 33
Business Plan for BLO (Client: MPAcc Investments)
The assistant manager position will be granted to an outstanding Bloer. Ideally the assistant
manager will have amazing styling skills, outgoing attitude, extensive customer service experience,
demonstrate their ability to lead the Bloer team and a willingness to learn.
5.2
Training Programs
All Bloers go through an intensive training program known as BLO U(niversity), where they learn to
master all of BLO’s signature styles. BLO U operates off a comprehensive system of manuals, person
to person instruction and coaching material to ensure consistency among each franchise location.
All potential Bloers will be enrolled in the two week intensive course that will educate them on all
bar menu styles. Training does not just cover hair; it also includes how to provide the full hair cadet
experience as well as product sales coaching. The program educates Bloers on BLO’s commitment
to the customer experience, brand culture and the overall salon vibe. Upon completion of the
training the Bloers will be able to BLO on brand and provide a fun experience to BLO customers.
The BLO franchise will also provide one-on-one training for the Bar Boss that will help to ensure the
Calgary location’s success and ensure that the bar is running according to the brand standards.
Upon completion of training, the franchise also provides access to the Style Directors to help with
continued training on an as needed basis. Further, the BLO brand team will visit blow bars to ensure
that all bars are styling according to brand specifications.
5.3
Human Resources Strategy
The goal of BLO is to provide a dynamic and exciting environment for its employees and clients.
Employees are encouraged to stay up to date on all current fashion trends and pop culture
happenings to create a cool salon vibe. BLO is not just about the hair but providing an affordable
luxury and an unforgettable experience.
The Bar will motivate employees by encouraging them to provide free hairstyles for each other
during off hours which also enhance employee training, and brand image; offering employee
appreciation days where the salon provides lunch prizes for excellent styling and customer
experience; encouraging employee involvement in social events put on by the Bar; and offering
friends and family days where employees can provide services at a discount to friends and family
members. The Bar will have an open door policy for all employees to express any concerns or
suggestions to improve the work environment. Further, the company will provide employees with
competitive wages to attract the best stylists and a 2% commission on all retail product sales. An
annual management bonus will be offered to the Bar Boss based on the Bar’s performance.
Initial start up training costs will be provided by the franchise to ensure that the Calgary location is
providing services that are up to brand specifications. Future training costs will be minimal as the
manager will provide all training required to new employees during slow operating hours. All
instruction and learning materials will be provided by the franchise.
Page 18 of 33
Business Plan for BLO (Client: MPAcc Investments)
For the chain of command please refer to the organization chart in Exhibit 2.
5.4
Labour Costs
Please refer to Schedule B within the Financial Plan for a detailed calculation of annual labour costs.
Initial labour costs are anticipated to be $597,111. These costs may increase or decrease depending
on client demand.
6.0
FINANCIAL PLAN
6.1
Critical Variables & Risk Assessment
In order for BLO Calgary to successful, the critical variables and the associated risks that will impact
profitability must be identified:
Clients – it is important to get a solid client base as they provide as the volume input in determine
our revenue. Therefore, if we do not attract enough clients to come to BLO, we will not be able to
sell enough Blo services and/or UNITE retail products.
 Risk & Mitigation: The risk of not attracting and retaining enough clients has a low likelihood
since BLO’s strategy is focused on “not cheating on your hairdresser”. In other words, the
first mover advantage will enable BLO to operate in a niche market. Since Calgary’s total
population of 1.3 million, with 535,000 within our target market (Calgary Economic
Development, 2011), we do not expect any difficulties in attracting a customer base
considering the maximum number of Blo Outs per year we can provide within our capacity is
approximately 52,000. This risk however, will result in a high level of impact on our
profitability should it occur.
Speed – our competitive advantage and position is dependent on our ability to provide our service
within the promised time frame, such as approximately 30 minutes for a Blo or 45 minutes for a
bridal consultation. Therefore, if we are not able to provide services within the promised time
frame, this will damage our brand equity and reputation, as well as limit our capacity to generate
revenue.
 Risk & Mitigation: The risk of not being able to provide our services by the promised timeframe has a moderate likelihood, especially during the first year when our staff is still
learning. However, we hire employees with experience and education in hair styling, as well
as provide employees through intensive training program developed by BLO Corporate. The
impact of this risk occurring will be high because as noted above, it will damage our
reputation, as well as limit our capacity. We have mitigated this risk and decreased the
likelihood of this risk by ensuring all our eight chairs are fully staffed during business hours
(even though we recognize it is unlikely we will achieve 100% capacity at all times). This has
been incorporated in our financial plan on Appendix A.
Price – currently BLO has a competitive advantage against the other hair salons due to the ability to
offer quick hair styles with a low price (re: Pricing Strategy). However, as discussed in industry
analysis, there are low barriers to entry, and thus, BLO faces the risks of increased competition.
Page 19 of 33
Business Plan for BLO (Client: MPAcc Investments)
Therefore, if competitor hair salons begin lower their prices for the wash, blow dry, style service, or
if there is a copy-cat business also offering low-price, then there is the risk that BLO might be forced
to decrease the price on the services. This will decrease our margins, thereby decreasing our
profitability.
 Risk & Mitigation: The risk of BLO having to decrease price has a low likelihood, since
currently our pricing is significantly lower than competitors. Furthermore, BLO also has
international brand equity, which will mitigate the risk of businesses copying BLO’s model.
In otherwords, even with potential of copy-cats, BLO may not necessarily be impacted on
other low pricing due to good reputation. The impact of decrease in price also has a low
impact because our current margin per Blo Out is approximately 70%.
Please see Exhibit 9 for a visual diagram on the likelihood and impact of each risk identified above.
6.2
Projected Financial Statements
Projected financial statements for the next five years have been prepared for the base case, best
case, and worst case scenarios. (Refer to Exhibits 1, 2, and 3 respectively) The following table is a
summary of the base case scenario:
Sales
Expenses
NI before Taxes
Income Taxes
Net Income
2012
768,917
818,867
-49,949
0
-49,949
2013
901,940
781,069
120,871
16,922
103,949
2014
1,030,376
822,494
207,882
29,103
178,778
2015
1,156,082
869,096
286,986
40,178
246,808
2016
1,273,540
917,892
355,649
49,791
305,858
Net Present Value (NPV)
$601,350
Internal Rate of Return (IRR)
58%
As a typical investor would require a 25% rate of return, the IRR of 58% (per Exhibit 1) makes BLO
Calgary an attractive investment opportunity for investors.
6.3
Financing Budget
BLO Calgary will be financed through a combination of long-term debt of $100,000 and equity of
$200,000 for a total investment of $300,000. The $100,000 long-term debt will come in the form of
a five year loan from a major Canadian bank with an interest rate of prime + 2%. Currently, the
prime rate is set at 3.0% which produces an overall interest rate of 5% once combined with the risk
premium of 2%. The risk premium of 2% is due to the moderate level of assessed risk related to
BLO Calgary. The $200,000 in equity will be funded through $25,000 contributions from the four
franchise owners and $100,000 through a venture capital investment for a 15% equity stake in BLO
Calgary.
Page 20 of 33
Business Plan for BLO (Client: MPAcc Investments)
6.4
Dividend Policy
BLO Calgary will re-invest the cash flow from operations into the business in the first year. In
subsequent years, BLO Calgary will pay dividends at a rate of 20% of accumulated retained earnings,
with increases of 5% in years 3, 4, and 5 respectively. All equity holders will share equally in the
dividend payouts.
6.5
Investment Analysis
As part of setting short-term and long-term goals, BLO Calgary has set the following financial goals:
 Earn a positive net income by the 2nd year of operations
 Achieve an Internal Rate of Return of at least 25% by year 5.
 Achieve a payback on investment within 5 years.
Refer to Exhibits 1, 2, and 3 for the base case, best case, and worst case, along with the calculations
of business value and payback period.
Goal # 1 – Earn a positive net income by the 2nd year of operations
Scenario
Worst Case
Base Case
Best Case
nd
Net Income (2 year)
84,726
103,949
148,803
As evidenced above, the goal of earning a positive net income is met under all three scenarios.
 Goal # 2 – Achieve an Internal Rate of Return of at least 25% by year 5.
Scenario
Worst Case
Base Case
Best Case
Internal Rate of Return
49%
58%
82%
As evidenced above, the goal of achieving an IRR of at least 25% is met under all three scenarios.
 Goal # 3 - Achieve a payback on investment within 5 years.
Scenario
Worst Case
Base Case
Best Case
Payback Period
3.91 years
3.04 years
2.89 years
As evidenced above, the goal of achieving a payback on investment within 5 years is met under all
three scenarios.
Page 21 of 33
Business Plan for BLO (Client: MPAcc Investments)
7.0
CONCLUSION
BLO’s innovative concept has proven itself in other large cities and is ready to conquer the next one.
Calgary is a perfect setting to launch the next BLO location and will take the market by storm. BLO
will take a large part of the market with the advantage of being the first mover. With the benefit of
having no direct competition, BLO will build trust and loyalty with consumers who will come to
recognize the brand and help spread advertising through word of mouth.
By investing in BLO, you will play a role in the creation of this new venture to Calgary and will
guarantee yourself a portion of a growing business.
Page 22 of 33
Business Plan for BLO (Client: MPAcc Investments)
EXHIBITS
EXHIBIT 1 - Porter’s Five Forces
Supplier
Power
Threats of
New
Entrants
Rivalry
Threats of
Substitutes
Buyer
Power
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Business Plan for BLO (Client: MPAcc Investments)
EXHIBIT 2 - SWOT Analysis
Strengths
•Blo has a strong brand identity and is highly active in within its local community.
•Blo U focuses on standardized training for all employees in services and products offered
to clients.
•Offers a unique atmosphere with extended salon hours.
•Focused on providing timely services tailored to client’s busy lifestyle.
Weakness
•Services provided are substitutable by customer's personal hairdressers as well as at home
styling tools and products.
•Blo salon profitability is limited to in house chair capacity of a maximum of 8 seats at a
time.
•Large start-up costs to set up salon location.
•Customers may remain loyal to their existing hair stylist.
Opportunities
•Develop media relationships with local celebrities.
•Blo has the first mover advantage in the industry.
•Lipstick index has predicted that women increase spending on beauty regimins during
economic downturns.
Threats
•The success of the company may attract competition.
•Existing salons may begin to provide similar services.
•Services are considered a luxury as opposed to an everyday occurrence.
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Business Plan for BLO (Client: MPAcc Investments)
EXHIBIT 3 - Positioning Map
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Business Plan for BLO (Client: MPAcc Investments)
EXHIBIT 4 – Marketing Events & Materials
MALL ADVERTISING
BLO-ON-THE-GO
ADVERTISING – CATCHY PHRASES & SLOGANS
PINK-WIG GIRL
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Business Plan for BLO (Client: MPAcc Investments)
EXHIBIT 5 - Floor Plan
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Business Plan for BLO (Client: MPAcc Investments)
EXHIBIT 6 - Organization Chart
Franchise
Owner
Bar Boss
Assistant
Manager
Bloers
Receptionist
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Business Plan for BLO (Client: MPAcc Investments)
Exhibit 7 – Competitor Location Map
Blo Dry Bar
HedKandi,
Pure Form
Black Market Hair
Zu Hair Salon
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Business Plan for BLO (Client: MPAcc Investments)
EXHIBIT 8 – Client Experience Process
1. Go
online/phone-in
to find out
hairstyles offered
11. Clients tell
their friends &
family about
positive
experience at Blo
Dry Bar
2. Make
Appointment specify hair style
desired
10. Client
completes
payment
3. Check-in with
reception
9. Stylist suggests
products to the
client
4. Reception
notifies stylist
8. Stylist ensures
client is satisfied
with their
hairstyle
5. Stylist greets
client and seat
them at their
station
7. Stylist engages
client in friendly
conversation
while completing
hairstyle
6. Client discusses
their desired
hairstyle
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Business Plan for BLO (Client: MPAcc Investments)
EXHIBIT 9 – Risk Analysis
Price:
-
Low likelihood, low impact
Speed:
-
Low likelihood, high impact
-
Mitigation: ensure store is staffed at 100% capacity to eliminate possibilities of wait time.
Clients:
-
Moderate likelihood, high impact
-
Mitigation: attract new customers and strong brand reputation to retain customers, by utilizing
marketing strategy such as maintaining ongoing communication with clients and participation in
local events.
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Business Plan for BLO (Client: MPAcc Investments)
REFERENCES
The Economist. 2011. Lip Reading. Lipstick index (beauty sales increase in time of recession)
Retrieved on July 11, 2011 from http://www.economist.com/node/12995765
Toronto Bridal Show. 2011. Toronto bridal show costs. Retrieved on July 11, 2011 from
http://www.torontosbridalshow.com/pdf/tbs_spring2011_application.pdf
Midland Display Products. 2011. Kiosk. Retrieved on July 12, 2011 from
http://www.midlanddisplay.com/products.asp?cat=141
Create It Displays. 2011. Banner. Retrieved on July 10, 2011 from
http://www.createitdisplays.com/hanging-2d-banners.html
Design X Manufacturing. 2011. Salon Equipment. Retrieved on July 8, 2011 from
http://www.salonfurniture.com/
Zurich Beauty. 2011. Salon Equipment. Retrieved on July 7, 2011from http://www.zurich-beauty.com/
Pay Scale. 2011. Labour costs stylists. Retrieved on July 8, 2011 from
http://www.payscale.com/research/CA/Job=Hairdresser_%2f_Hairstylist/Salary
Pay Scale. 2011. Labour cost receptionists. Retrieved on July 4, 2011 from
http://www.payscale.com/research/CA/Job=Receptionist/Hourly_Rate
Statistics Canada. 2011. Community profiles. Retrieved on July 7, 2011 from
http://www12.statcan.gc.ca/census-recensement/2006/dp-pd/prof/92591/details/page.cfm?Lang=E&Geo1=CSD&Code1=4806016&Geo2=PR&Code2=48&Data=Count&Search
Text=calgary&SearchType=Begins&SearchPR=48&B1=All&Custom=
City of Calgary. 2011. Retrieved on July 5, 2011 from
http://content.calgary.ca/CCA/City+Hall/Business+Units/Community+and+Neighbourhood+Services/Soc
ial+research+policy+and+resources/Community+profiles/Community+Profiles.htm
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Business Plan for BLO (Client: MPAcc Investments)
Calgary Economic Development. 2011. Retrieved on July 7, 2011 from
http://www.calgaryeconomicdevelopment.com/live-work-play/live/demographics
Wise Geek. 2011. Psychographic segmentation. Retrieved on July 3, 2011 from
http://www.wisegeek.com/what-are-yuppies.htm
Environics. 2011. Retrieved on July 11, 2011 from
http://www.environicsanalytics.ca/prizmc2_clusters.aspx
Professional Consultants & Resource. 2011. Retrieved on July 3, 2011 from
http://www.proconsultants.us/blog/?p=11
Calgary Economic Development. 2011. “Demographics”. Calgaryeconomicdevelop.ment.com. Retrieved
on July 11, 2011 from http://www.calgaryeconomicdevelopment.com/live-work-play/live/demographics
Industry Canada. 2011. “SME Benchmarking Tool: Hair Salon Industry in Alberta”. www.ic.gc.ca.
Retrieved on July 11, 2011 from http://www.ic.gc.ca/app/sme-pme/bnchmrkngtl/rprtflw.pub;jsessionid=00009Nz7BoXQg_6AGL1fgmON-Rs:1247mpv0c?execution=e1s7
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